Costs to rebuild Portland, Oregon, schools approach $1B

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Dive Brief:

The current cost estimate for a bond-supported, four high-school reconstruction and modernization program in Portland, Oregon, is $980 million, or $190 million more than the $790 million local voters approved in 2017, according to the Portland Tribune.

The Portland Public Schools Board of Education received an update about the bond program on August 14, but documents prepared for the meeting by the Bond Accountability Committee indicate that a portion of the cost overruns are attributable to an $11.4 million budget reduction that will go toward work at local middle schools, contrary to the bond program's scope of work, and board approval of a master plan at one of the high schools that will exceed the bond budget by more than 35%. Two other high schools have also surpassed their original budgets by approximately the same percentage. The committee report goes on to question the processes by which the board arrived at the original budget and said the Office of School Modernization is performing a comparative cost analysis between the schools in the program and other similar projects in an effort to arrive at a solid estimate, as well as considering using outside parties to assist in an evaluation of the current budget.

According to Yousef Awwad, former interim superintendent, who is locked in a legal battle with the school district regarding his termination, the $790 million bond issue could be worth up to $828 million when factoring in interest earned on sold bonds, matching grants and bond premiums. He added that President Donald Trump's tariffs and the local building boom have probably increased the costs of construction.

Dive Insight:

If the school board's budget was based on 2017 construction labor and material prices, then it's possible, as Awwad proposed, that increasing construction costs during the past few years have played a significant role in the bond program's overruns.

In fact, it's the "booming market" that Charleston, South Carolina, school officials have pointed to in an effort to explain about $29 million in budget overruns in four of its construction projects. Because the school board has to compete with the local commercial market, where subcontractors have a large pipeline of projects waiting, bids are coming in higher than original budgets which were put together as far back as 2014.

Similarly, the only bid for one high school renovation in Roanoke, Virginia, recently came in $17 million higher than the Roanoke County School Board budgeted. The school board expected at least three competitive proposals for the project, but the lone submission perhaps speaks to how busy local contractors are. Instead of moving forward with the project, however, the board plans to explore a redesign.